Q&A with Microsoft's Top Channel Exec: Is the MPN Still Worth the Cost?

Two years after Microsoft fully launched the Microsoft Partner Network (MPN), the company's market power has decreased, although Microsoft enjoys more buzz with the Windows 8, Surface and other recent launches than it has in years. Microsoft channel executives have chosen this moment to launch the first price increase of the MPN gold competency entry fee. In the United States, the price of gold went up 38 percent from $3,800 to $5,260, effective Nov. 19.

We caught up with Jon Roskill, corporate vice president of the Microsoft Worldwide Partner Group, for a lengthy e-mail interview while he was traveling to meet with partners in Asia last month. We asked about the reasoning behind the price decisions and about the overall value of the MPN. Here's what he had to say.

RCP: Why did Microsoft choose to increase the gold competency fee?Roskill: Since the Microsoft Partner Network launched gold competencies in October 2010, we've continued to enhance the benefits provided to partners who achieve this distinction. One example is the solution incentives program, now with more than 65 percent of gold competency partners eligible to participate. Another is support from dedicated tele-partner account specialists, now available in 49 countries, to help partners make the most of all of their gold competency benefits.

The depth and breadth of today's partner benefits is significant -- especially when you compare their value to current partner membership fees. On top of incentives and dedicated support, partners receive generous internal-use licenses to the latest Microsoft software, free online training, presales and technical advisory support, and customizable, co-branded marketing and sales materials. Partners also may even have access to additional unique, country-specific benefits provided by Microsoft subsidiaries, such as local event access.

We feel confident in the strong value equation we're providing for our partners. This is only the second major price change (outside annual exchange rate adjustments) we've made to the top tier in the worldwide program over the last six years. While we review membership fees annually, we strive to keep these types of adjustments to a minimum.

Why did Microsoft choose to keep the silver competency fee the same rather than increasing it at the same time?
As we add significant additional benefits to silver competencies, we may consider a price increase at this tier, but at this time we are not changing the silver competency fee.

What are the global parameters of the increase? In other words, it amounts to 38 percent in the United States. Is that the global fee hike percentage?
Fees vary by country. To see local prices, partners should consult the competency requirements page on their local partner portal. Generally, the target was to price the gold competency fee at a global average price of $4,995 in developed markets and $3,995 in emerging markets.

What's the thinking behind keeping the Small Business competency price the same?
Many Microsoft partners who specialize in providing solutions and services to small businesses are small businesses themselves. The Microsoft Small Business competency addresses the unique needs of these partners, with more tailored benefits and requirements, and a cost-effective enrollment fee for attaining the gold competency and given the transition with the Small Business Specialist Community, we felt this pricing more appropriate for this area in the Microsoft Partner Network. [See "Microsoft Extends Price Break on Small Business Silver Competency." -- Ed.]

"We are the most competitive and beneficial partner program available, and we feel confident in the strong value equation we are providing for partners."

Are there specific new benefits to gold that merit the increase, or is this a reevaluation of the delivery cost of old benefits?
At the core, this is a reevaluation of the delivery cost of current benefits, although we have delivered significant additional value with the integration of the solution incentive program and commitment of tele-partner account specialists. The fee covers all gold membership benefits including special/unique benefits for earning a gold competency. Some of the unique benefits include:

Plan: Partners are eligible for a named Microsoft contact that will support the creation of a business plan as well as partner-sales and benefit-consumption efforts. Additionally, partners receive significant software licenses for a range of Microsoft products for internal use, training, development, testing and demonstration purposes.

Enable: Sales and technical training to differentiate their capabilities, with more than 15,000 online and live learning events available.

Market: Partners receive prioritized marketplace exposure in Microsoft customer-facing directories searched by more than 700,000 contacts in the last year. Additionally, partners receive a Microsoft Partner gold competency logo. This logo enables them to promote their business with a distinctive brand -- earning a gold competency may be something they share with only a few partners in their area, a significant business advantage.

Sell: Eligibility for channel incentives programs. These reward programs are a significant part of our $4 billion investment in partners.

Support: Comprehensive technical support including 50 phone-based advisory hours, plus unlimited deal-related support across any stage of their business cycle.

Is there anything new, especially on the incentives front, that now favors gold competency partners and helps explain part of the gold competency price hike?
A gold or silver competency is a requirement to be eligible for any commercial incentive plan. There's an increased level of incentives available for gold partners that scales all the way up to 30 percent for some key workload/solution sales. We will continue to drive the higher incentive schemes into gold to ensure the value of gold is aligned clearly to the incentive programs.

What motivated Microsoft to look at the fee now?
Every year, the Microsoft Partner Network worldwide team evaluates the various membership components to ensure that the value of the benefits we provide is appropriately balanced with the cost of delivering the benefits. After extensive internal cost evaluations and partner consultations, we've made the decision to raise the gold competency membership fee.

Did you commission the IDC survey about the value of gold to soften the blow of the price hike? [The Microsoft-sponsored white paper, released in July, concluded that a partner with two to five competencies can get about $320,000 in value from using MPN benefits. See the second-to-last question for more details. -- Ed.]

No. The IDC study focuses on overall value of MPN and is not specific to gold competency members.

Why not announce that a change was coming to gold competency fees at the Microsoft Worldwide Partner Conference (WPC) rather than in a regional blog a few weeks later?[The WPC is when Microsoft usually communicates major changes to the MPN, and is heavily attended by Microsoft gold competency partners. The 2012 event was held from July 8-12. -- Ed.]

The price increase was proactively communicated via e-mail to partners on July 18, 2012. At that time, partners were encouraged to connect with their MPN Marketing Manager, PAM, TPAM, TPAS or MPN Help (1-800-MPN-SOLV) directly with any questions or concerns.

Is there internal pressure inside Microsoft from above the partner group to justify the cost of supporting partners?[Roskill reports to Vahé Torossian, corporate vice president of the Worldwide Small and Midmarket Solutions and Partners Group. Torossian reports to COO Kevin Turner, who reports to CEO Steve Ballmer. -- Ed.]

No. The success of Microsoft and the success of our partners is and always has been very closely intertwined.

How does the new fee compare to what competitors charge for their top-tier programs?
We've done competitive benchmarking, and these price changes are equivalent to what our competitors charge for the top, non-alliance tier in their programs.

Can partners expect more Microsoft marketing in support of gold partners now that they're paying more?
From a marketing perspective, gold partners will receive incremental partner marketing execution benefits including marketing plan creation by a field-based partner marketing manager. This partner marketing manager will use the exclusive MPN partner marketing campaigns that align to the Microsoft customer campaigns, and develop an actionable marketing plan for the gold partners.

We noticed recently that the number of Internal Use Rights (IUR) seats in the Cloud Essentials program has dropped -- from about 250 seats of BPOS and CRM Online to 25 of each now (with Office 365 instead of BPOS). When were the IUR seats reduced and why?
Cloud Essentials was always meant to be the starter pack for our partners to start using the cloud, where Cloud Accelerate is for partners that are more invested in the cloud and driving sales. Cloud Accelerate is where we provide an increased number of seats (250). When we first started, our systems would only allow us to provide one seat count package so we opted for more versus less. Now we're able to have two separate packages, which is why you now see a lower seat count on the "starter pack" within Cloud Essentials. We were also able to turn on the delegated administration tool for Cloud Essentials partners, which gives them more capability to help them manage their customer base.

How many unique partners are now at one gold competency, one silver competency, multiple competencies with at least one gold, multiple silver-only competencies?
We don't break these numbers out, but I can tell you that, cumulatively, the MPN currently has 9,500 unique gold partners and 20,000 unique silver partners.

Which competencies are proving most popular? Any surprises in the competency composition?
We're thrilled to continue to see partners investing in the MPN and growing their businesses. The top five growth competencies include:

Hosting

Communications

Messaging

Business Intelligence

Application Integration

Some partners are telling us this price increase is further evidence that Microsoft no longer wants to work with those smaller partners who can't make a visible dent in sales by themselves, but who collectively have made a difference for Microsoft over the years. What's your message to those partners who see a number of recent moves as evidence Microsoft values small partners less?
All of our partners are valuable to us, regardless of size. As such, we have structured our program to ensure that our smaller partners are still able to access the tools and resources they need to succeed and can attain at least one gold competency if their practice is of sufficient focus, quality and commitment to Microsoft. A recent IDC study found that our smaller partners continue to see significant value from the MPN -- according to the study, a 50-person Microsoft partner organization with approximately $2.5 million in revenue and two to five competencies can realize $320,000 USD in value directly attributable to MPN benefit utilization. We factor smaller partners into our partner strategy and roadmap every day.

Additionally, this is precisely why we chose to not increase the gold price of the Small Business competency. As mentioned previously, most Microsoft partners who specialize in providing solutions and services to small businesses are small businesses themselves. The Microsoft Small Business competency addresses the unique needs of these partners, with more tailored benefits and requirements, and a cost-effective enrollment fee for attaining the gold competency.

Partners can join the Small Business competency as a silver or gold member. Silver membership costs a global average price of $999 through Dec. 31, 2012. The special promotion price will be extended through June 30, 2013. On July 1, 2013, the silver membership cost will be at a global average price of $1,490 USD.

Do you believe the Microsoft Partner Network is still a good value for partners?
Absolutely Microsoft is and will continue to be the best business decision for partners. We are the most competitive and beneficial partner program available, and we feel confident in the strong value equation we are providing for partners.

"We've done competitive benchmarking, and these price changes are equivalent to what our competitors charge for the top, non-alliance tier in their programs."

The New Tiers of MPN Pricing

In November, Microsoft changed some of the pillars of its prices for partners to participate in the Microsoft Partner Network (MPN). Here are some of the key prices for U.S. partners under the new structure and details of what those fees include.

$5,260
On Nov. 19, the enrollment fee for the gold competency, Microsoft's top tier for non-alliance partners, went up 38 percent from $3,800 to $5,260. As before, a partner pays only for the first gold competency; every one thereafter comes at no additional charge. If a partner had earned and paid for a silver competency first, then the partner only pays the difference to get to the $5,260 ($3,410).

There are other investments beyond the base price to get to the gold competency level. The company has to employ or contract with four Microsoft Certified Professionals (MCPs) who don't count toward any other competency. The exceptions here are the Midmarket Solution Provider competency, which only requires three unique MCPs for gold, and the Small Business competency, which only requires two. Two people must pass a sales and marketing competency assessment. The gold level also requires a partner to make a minimum revenue commitment and get references from five customers. Revenue commitments are also an important part of the gold competency.

The Microsoft Dynamics-based competencies, ERP and CRM, have slightly higher requirements -- six MCPs and the requirement to buy a Partner Service Plan, which includes training, tools and support.

$1,850
Unchanged is the fee for the first silver competency, at $1,850. Subsequent silver competencies do not require an additional fee.

Other investments to earn the silver competency include employing or contracting with two MCPs. Unlike with the gold competency, the Midmarket Solution Provider competency has the same requirement on MCPs as other competencies. See the next section for the Small Business silver competency, which is a special case. An employee or contractor must pass a Microsoft Licensing overview assessment and an employee or contractor has to pass a sales and marketing competency assessment. The partner company also must get three customer references.

$999
The creation of the Small Business competency had been a popular cause for years, but one of the implications of its creation in 2012 was a price increase. While small business-focused partners were able to join the Small Business Specialist Community for little more than the cost of an Action Pack, competency fees are generally much higher. In a nod to that challenge for smaller partners, Microsoft created an introductory rate of $999 that cut the silver competency fee almost in half for the Small Business competency. That introductory fee was set to expire on Dec. 31, 2012, but now Microsoft is extending the offer until June 30, 2013.